The cryptocurrency landscape has witnessed a dramatic transformation as more than 80% of tokens introduced in 2025 are currently trading below their initial valuations. This trend underscores a significant shift in the market”s interest in venture-backed cryptocurrency projects.
According to data from Memento Research, a total of 118 notable token generation events (TGEs) were monitored in 2025, with 100 of these tokens, representing 84.7%, trading at a loss compared to their opening fully diluted valuations. The report highlights that the median token in this cohort has suffered a staggering decline of 71% from its launch price.
Memento”s analysis indicates that TGEs in 2025 often marked the peak for many projects, as price discovery began prior to the TGE. Investors entering at launch were essentially hunting for rare successful tokens, while the typical performance trend showed a substantial downward trajectory of approximately 70%.
The Mechanics Behind the Market Decline
To grasp the impact of this downturn, it is essential to differentiate between market capitalization and Fully Diluted Valuation (FDV). Retail investors typically acquire the circulating float, which encompasses only 10% to 15% of the total token supply available for trading. However, the price of this circulating supply is increasingly influenced by the FDV, which reflects the total project value once all tokens held by venture capital and team members are released.
Memento”s findings reveal a troubling trend: larger launches, particularly those with high FDVs, have performed worse. Projects with initial valuations exceeding $1 billion have all recorded losses, with a median decline of around 81%. For instance, the layer-1 blockchain Berachain saw its valuation plummet from over $4 billion to about $300 million shortly after launch.
The Liquidity Crisis and Institutional Withdrawal
This ongoing underperformance cannot solely be attributed to poor tokenomics; it also reflects a challenging macroeconomic environment wherein the broader crypto market has lost approximately $1.2 trillion in value. During this period, Bitcoin retraced roughly 30% from its peak of $126,000 to below $90,000, yet it remains the main avenue for institutional investment.
The approval of Spot ETFs in the United States has directed capital toward Bitcoin and Ethereum, effectively reducing demand for riskier tokens. Jeff Dorman, Chief Investment Officer at digital asset manager Arca, notes that no liquid fund has participated in a TGE for over two years, indicating a significant shift in institutional strategy. As a result, the absence of institutional buyers has left a vacuum in liquidity, with prices consistently trending downward.
Ethical Concerns in Token Issuance
This ongoing decline has sparked intense discussions regarding the ethical implications of the current cryptocurrency venture capital model. Critics argue that the industry”s focus has shifted towards profit extraction rather than genuine value creation. Omid Malekan, an adjunct professor at Columbia Business School, asserts that excessive fundraising and pre-selling of tokens erode value, with teams prioritizing short-term gains over sustainable success.
Despite the prevailing losses, a few projects have managed to thrive, often due to unique catalysts. For example, Aster, backed by Binance founder Changpeng Zhao, experienced a remarkable surge in valuation post-launch. However, successful tokens generally adhered to more modest valuations, avoiding the inflated premiums associated with unproven projects.
Looking ahead to 2026, the lessons learned from this challenging year emphasize the need for issuers to adopt more sustainable token launch strategies. The market has indicated a clear preference for tokens that serve real utility rather than mere fundraising vehicles. Token issuers must focus on realistic valuations and enhance liquidity through more substantial initial float percentages.
Investors are also urged to approach TGEs as they would earnings reports, requiring patience and due diligence to navigate the evolving landscape effectively.
